U.S. court confirms Citgo board appointed by Venezuela's opposition

Citgo’s logo. Venezuelan leader Nicolas Maduro’s efforts to regain control of Citgo Petroleum were set back after a Delaware judge denied Maduro’s authority to appoint the leadership of the Houston refiner.

Citgo’s logo. Venezuelan leader Nicolas Maduro’s efforts to regain control of Citgo Petroleum were set back after a Delaware judge denied Maduro’s authority to appoint the leadership of the Houston refiner.

In a victory for Venezuela's opposition government, a U.S. judge confirmed Citgo Petroleum's board of directors appointed by Juan Guaido, squashing socialist leader Nicolas Maduro's efforts to regain control over the Houston oil refiner.

On Wednesday a Delaware judge issued a final order approving the Guaido board, who have been effectively leading Citgo since the opposition leader appointed the board members in February.

Owned by the Venezuela state oil company PDVSA, Citgo is considered the South American country's most prized foreign asset and a key a piece in the political battle between socialist leader Nicolas Maduro and Guaido. Both sides agree the president of Venezuela has the authority to appoint the board of directors for Houston-based Citgo Petroleum but clashed over who constitutes the legitimate president of the economically-ravaged country.

The Maduro administration, which has accused the opposition of trying to steal Citgo, sought to use the court system in Delaware, where Citgo is incorporated, to wrest control away from Guaido.

Earlier this month, the Delaware judge presiding over the case — Kathaleen McCormick — ruled that the Trump administration's recognition of Guaido as the legitimate leader of Venezuela gives his government legal authority to appoint Citgo's board of directors. McCormick, however, stopped short of confirming the board members individually to give Maduro-backed team 10 days to file a challenge in the process.

On Wednesday McMormick issued a final order confirming her earlier ruling and individually confirming the five board members, led by the first chairwoman Luisa Palacios.

Citgo praised Wednesday's ruling in a statement.

"We are heartened that the Court disavowed this flagrant attempt on the part of the Maduro regime to use the U.S. judiciary to advance anti-democratic objectives. Since their naming in February, the Directors of Citgo have worked with senior leadership to ensure corporate and financial stability--resulting in a rating upgrade by a leading rating agency -- enhance corporate governance and protect company assets. The company has made progress across all three areas of focus," Citgo said.

The ruling is a victory for the fifth largest U.S. oil refiner at a time when Venezuela's creditors are moving closer to satisfy billions of dollars in debt by seizing Citgo's assets. A recent federal appeals court ruling said a defunct Canadian mining firm owed $1.4 billion by Venezuela may seize shares of Citgo, potentially opening the door for other creditors to make claims against Citgo. The court last month granted Venezuela and Citgo an extra 45 days to appeal the ruling.

Last week Citgo's board of directors has appointed former Venezuelan oil executive Carlos Jorda as CEO of the Houston refining company. The former executive with the Petroleos de Venezuela, S.A., or PDVSA, Jorda also held an executive role with the state-owned oil company's U.S. subsidiary PDV America and previously served as chairman of the board for CITGO.

Citgo's fate could ultimately depend on whether the Trump administration intervenes to preserve the company for the Guaido government. Citgo employs about 800 in Houston and 3,400 nationally.

Six former Citgo executives from Texas and Louisiana who were arrested by the Maduro government nearly two years ago on what their families say are trumped up charges are still awaiting trial in a Venezuelan detention center with no due process and little access to medical care, according to their families who live in the U.S.